I wrote last week about the trend in "special" dividends, which are one-time payments of cash to shareholders as opposed to "regular" dividends that are typically maintained at a level and increased over time, paid out on a quarterly (or monthly, semi-annual or annual) basis. There have been several more announced since then, including GES, MASI, STV and ABVT. While not all of the payers have been returning just excess capital (as some have been even borrowing to make the payments), most are simply a return of cash that the company doesn't need. The beauty is that investors get that cash, but it doesn't necessarily change the earnings power of the company and, thus, the capital appreciation. Yes, in some cases, it's a free lunch.
I wanted to follow up today with a quick look at some names that might announce special dividends in the coming days. In that original article, I highlighted FLO, NPK and SKX. In each case, the company has high inside ownership and is either abundant in cash or has less debt than they typically carry (FLO). Looking at the 34 names in either of the models, I would add CALM, CPRT, CRDN, and EZPW to that list that I shared previously. CRDN, in particular, is a prime candidate in my view given the high inside ownership as well as the excess cash.
CALM pays a dividend. I don't know how much of their cash, which is over $3 a share is needed operationally (and they do have some debt), but they could ostensibly pay a $2 dividend without really changing the balance sheet. If they are on the verge of making an acquisition, it would reduce the likelihood. CPRT has high inside ownership and lots of cash, but it hasn't paid a dividend ever. Paying $2 wouldn't change their balance sheet substantially. CRDN too doesn't pay a dividend at all. They have net cash of $7 per share. CEO Joel Moskowitz owns over 1.2mm shares, so this would make sense for him (locking in at the low dividend tax rate). This is one reason why I hang onto the position in Top 20 despite it being relatively close to my one-year out target of 33. Finally, EZPW has excess cash (though some debt). They have a lot of inside ownership, but their Board (the ones that own the stock) knows that they may need cash to do acquisitions, making it a tougher call.
I just wanted to update that list. The other 3 I previously mentioned remain prime candidates, with CRDN possibly just as likely and the others less so. CHS, which I didn't mention, as well as several others, has a lot of excess cash but lacks the insider ownership incentive.